Sir, Husband & Wife both are working. Husband has
invested all his savings & avail a housing loan while purchasing of
residential flat. Residential flat & Housing loan is in joint name.
Husband’s monthly earnings are sufficient for his family maintenance &
Housing loan EMI only. There is no surplus left in the hands of the husband.
They have mutually planned that the earnings of wife should be invested for
first Daughter’s Education, Marriage & rest for their retirement planning.
They have obtained a floating mediclaim plan for any unwanted medical treatment
of Rs. 3.50 Lacs. I would like to know in what proportion their investments
should be made i.e.

1.In the name
of wife only or

2.In the name
of husband only or

3.In the name
of husband & wife equally or

4.In the name
of daughter.

Following additional aspects may further be
considered:

1.Advice the planning
for investments in such a way that no one can
suffer in case of any uncertainty or major medical problem arises
around Rs. 10-15 Lacs in the family.

2.Whether wife
can claim Interest & Principal repayment of Housing
loan under the Income Tax Act, if only husband repays from his earnings
only? [Sara Vij-cnpcoca@gmail.com]

Opinion

1.It’s
indeed a query with lot of practical relevance and need a sensible &
personalized individual approach. The money doesn’t have any colour & whosoever
invests gets the same value for it. In a family, flow of funds plays a very
vital role in taxability and accrual of income therefrom. Under the Income Tax
Act-1961, the movement of funds also determines the admissibility &
availability of deduction. By whom or in whose name the amount should be
invested vary significantly depending upon various factors like
- applicable slab of the individuals investor
- nature of investment-long term or short term
- nature of income yielding i.e., tax free or taxable
- risk element involved therein
- present & future income out of the investment etc.
The investment in the name of wife or husband or major/ minor child need to be
done after considering various other factors also & it is practically
impossible to standardize or advise it in totality in an isolated manner.

2.Normally,
most of the deductions are admissible subject to the condition of payment. The
deduction u/s 80C towards the repayment of the principal portion of housing
loan would not be available to wife if
a] the husband pays the amount
b] the same is paid by & on his own behalf by the husband and
c] the amount appears to be non recoverable from wife.
However, if the correct accounting treatment is given in the books &
Balance-sheet to show that the amount though paid by husband is indeed paid on
behalf of the wife as well and the same is recoverable or adjustable against
other amount, the wife could also claim the deductions. The same is the case
with the claim towards interest on housing loan.

Query 2]

I have some queries regarding wealth tax. Can you please
clarify them:

1.House- Any building or land appurtenant thereto
whether used for residential or commercial purposes or for the purpose of
maintaining a guest house or a farm house in an urban area.Exceptions- Houses which are.

(a)mean exclusively
for residential purposes and which is allotted by a company to a whole time
employee (including officer or director in whole time employment), having gross
annul salary of less than Rs.5 lacs.

(b)Stock-in-trade.

(c)Occupied for business or profession of the assessee.

(d)Residential property and which is let out for a
minimum period of 300 days in the previous year.

(e)Commercial establishments or complexes.

2.Motor cars-Except
that which is used in the hiring business or as stock-in-trade.

3.Jewellery-Except
that which is used as stock-in-trade

4.Yachts, boats and
aircrafts-other than those used for commercial purposes.

5.Urban land-any
land situated in urban area.

Exceptions-

(i)Land on which
construction of a building is not permissible under any law.

(ii)Land occupied by
any building which has been constructed with the approval of the appropriate
authority.

(iii)Unused land held
for industrial purposes up to 2 years

(iv)Land held as stock-in-trade up to 10 years.

6.Cash in hand-For
individuals and HUF’s, in excess of Rs.50,000/- and in the case of any other
person, any amount not recorded in the books of account.

E. Net
Wealth- Section 2(m)- The difference between aggregate value of assets and the
value of all debts owed by the assessee on the valuation date which have been
incurred in relation to the said assets. There is no separate rate for
individual items. Net Wealth is liable for wealth Tax.

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